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What is a Customer Data Platform?

At Sterling Woods, our mission is to drive hard sales for our clients. So when a new piece of technology or a technology buzzword starts to make the rounds, we like to kick the tires on it to make sure it’s not just the latest, shiny object and can actually produce an ROI.

The current hot topic on the conference circuit is the Customer Data Platform (CDP). Here, we’ll unpack some of the most common questions surrounding CDPs, so you can decide if you want to leverage this technology for your digital business.

(Spoiler alert: You do.)

1. What Is a Customer Data Platform, or CDP?

David Raab, Founder of the Customer Data Platform (CDP) Institute, defines a customer data platform as “a marketer-managed system that creates a persistent, unified customer database that is accessible to other systems.” But what does that mean exactly?

As marketers collect more and more data, managing and integrating it all has become increasingly difficult. The need to streamline all the pieces and parts to make informed decisions based on all the data points, rather than a select few, is clear. Enter CDPs.

Customer Data Platforms collect user data from multiple channels and match it all together. They can follow and identify a single person and track how they interact with your brand both online and offline.

CDPs see detailed browsing history on both web and mobile, interaction with social channels, phone calls, emails, and chats. Those details are then stored in a single database for your team’s use. CDPs make it easier to track your customer’s entire journey, rather than focusing on just one segment of it.

2. How Is a CDP Different from My CRM, Like Salesforce or Hubspot?

While CDPs are often confused for CRMs, they do have a few key differences. Customer Data Platforms can track anonymous visitors, whereas CRMs can only track known customers.

Generally speaking, CDPs are simpler and more streamlined to prevent data duplication. And, most importantly, they integrate data across channels and departments in a way that CRMs cannot.

In short, a CRM can only tell you information about known customers or prospects. CDPs can track known and unknown people across your different channels.

The simplicity of CDPs has also moved this kind of software out of the hands of IT and directly into the hands of marketers. This change is especially helpful for niche publishers who might need to work with lots of streams of data but don’t have a large technical team to back them up.

3. How Is a CDP Different from My Data Management Platform?

The CDP is more focused on making sense of data you own about your customers, while a DMP is more about aggregating and generalizing third-party data. As Ameet Shah explains, CDPs empower you to take ownership of all of your streams of first-party data and use them to drive conversion.

Specific information about those interacting with your brand allows you to set goals like, “I want to sell gardening tools to the people on my list who have demonstrated an interest in gardening through their behavior on my site or social channels.” DMPs, on the other hand, are only useful for general advertising focused on demographic data (i.e., “I want to target 30-year-old women”).

In my experience, you can ultimately make more money by using your own proprietary data smartly rather than by buying aggregated third-party data from someone else. You’ll have specific, targeted insights you can’t otherwise collect. DMPs serve advertising, but you can use a CDP in all kinds of ways.

4. How Can I Use a CDP to Make Money?

Because they’re such new technology, being able to say you have a Customer Data Platform feels cool—but it doesn’t serve much of a purpose if you can’t leverage the data you collect to make money. In addition to their overall ease of use and omnichannel experience, CDP technology can be used to home in on your whales.

Whales are the customers that are most enthusiastic about your brand. If you’re able to track customer interactions across all platforms, it’s easier to identify these superfans.

CDPs can also enable what I call “session-based marketing.” Based on a visitor’s prior behavior, what can you deduce about their needs, wants, and preferences? From there, how can you create the experience and produce the offer that best meets their needs?

Session-based marketing leads to more conversions by revealing what site visitors value about your brand and proving how you can deliver that in spades. And as you continue to track their interactions with your brand, you can refine your approach and drive your customers up the product pyramid. This, in turn, gives each customer a higher lifetime value, plus things you can track to make sure you are earning an ROI on your investment.

A Customer Data Platform can give publishers the leg up they need to solve their customers’ problems. With the help of a CDP, publishers can serve their customers with the most comprehensive insights on the market, which—as we know—is a key component of monetization.

About the Author

Rob Ristagno, Founder and CEO of Sterling Woods, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. He started his career as a consultant at McKinsey. Ristagno holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.

Rob is the author of A Member is Worth a Thousand Visitors: A Proven Method for Making More Money Online. He regularly speaks at key media conferences, including at Niche Media events, Specialized Information Publishers Association meetings, and the Business Information and Media Summit.